Telecommunication firms are looking to jump
ahead of leaders in the mobile industry like Apple andGoogle with technology that
allows users to pay for items such as their morning coffee by swiping their
mobile phones instead of using debit cards or cash.

Paying
for everyday items via mobile phones is a technology known as near-field
communications (NFC). It allows mobile users to purchase items bytapping
their phone on a specialized reader at a store's cash register.

Telecom
companies such asVodafone andFrance
Telecom are looking to get ahead of other mobile giants like Google
and Apple -- who are leaders of mobile software, devices and applications -- by
incorporating NFC technology into their mobile devices. In fact, the Mobile
World Congress, which opens in Barcelona today, will allow telecom operators to
discuss the use of this new technology.

"There
is a game-changing opportunity here for operators to effectively displace
credit cards and banks," said Dan Hays, partner at global management
consulting firm PRTM. "Mobile payments are arguably the next major change
in the mobile industry."

While
certain telecom firms are eager to jump ahead of the mobile game with NFC
technology, they need to pick up the pace because mobile payments already exist
in Japan and Korea, though the technology is being "held back from mass market
adoption" because of confusion surrounding the business model and the lack
of handsets. Also, Google has already started developing such technology for
theAndroid
mobile operating system, and Apple has began working on an NFC chip for the
iPhone that would utilize an iTunes payment system.

In
addition, Starbucks has even developed a mobile payment system in 6,800 of its
stores in the U.S. that utilizes a mobile app downloaded on the Blackberry oriPhone.

It makes
sense that the competition for developing the NFC technology is already cutthroat
even before mass-market adoption because IE Market Research estimates that the
amount of money at stake in this new market is about $1.3 trillion globally.
Jupiter Research estimates that one in every six phones will have NFC
technology by 2014.

With that
much money at stake, the telecom operators are looking to take on credit card
companies like MasterCard and Visa. Credit card companies are optimistic about
the technology because it could increase transactions and fees.

Both the
U.S. and Europe have already started experimenting with different business
models. For example, Verizon, AT&T and T-Mobile joined together in the U.S.
last year with Discover Financial Services and Barclay's Bank and had customers
sign up for a Discover credit card in order to launch mobile payments.In
Europe, France Telecom's Orange joined forces with Bouygues, SFR, various
French banks and the local government to give 3,000 residents a NFC-enabled
phone to use at 1,000 local retailers and on local trams in a year-long
project.

"You
need a big base of customers to make this work," said Anne Bouverot,
Orange's executive vice president of mobile services. "It's also a way to
provide an additional service to customers that we think will increase their
loyalty and attention."

With
several mobile companies competing neck-and-neck, telecoms firms plan to pave
the way to NFC victory by heavily investing in mobile payment setups in
geographic areas that do not have access to bankcards or banks such as India
and Africa. This plan will allow telecom firms to attract those in emerging
economies, and help them compete with well-established credit card systems in
the U.S. and Europe. In addition, it will help Orange reach its goal of
equipping 500,000 clients withNFC
phones this year.

France
Telecom's Orange has also announced today that it has signed an agreement with
Samsung.